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John Mwangi Githaka - Master of Business Administration Student, University of Embu, Kenya

Kimani E. Maina - Lecturer, Department of Business and Economics, University of Embu, Kenya

Susan Gachora - Lecturer, Department of Business and Economics, University of Embu, Kenya


Savings and Credit Co-operative Societies (SACCOs) are quasi financial institutions that mobilize savings, provide loans as well as other products to their members. Liquidity is considered as one of the serious concern and challenge for the modern era SACCOs. A SACCO having good asset quality, strong earnings and sufficient capital may fail if it is not maintaining adequate liquidity. The objective of the study was to assess the effect of liquidity management on liquidity of Savings and Credit Co-operatives Societies in Kirinyaga County, Kenya. Descriptive survey research design was used in this study. The target population consisted of all the 60 registered SACCOs in Kirinyaga County from which a sample size of 18 SACCOs was drawn. The study employed stratified random sampling technique. Primary data was collected by use of self-administered semi-structured questionnaires while secondary data was collected using audited financial statements of the SACCOs and regulator (SASRA). A pilot test was conducted to ascertain the validity and reliability of questionnaire. The Cronbach’s alpha coefficient was used for reliability test while the content validity technique was used in validating the research instruments. The data was analyzed using SPSS with the help of descriptive statistics tools such as percentages, mean, standard deviation, mode and variances. Inferential statistics was done by use of Pearson’s product moment of correlation. Multiple regression analysis was performed to assess the relationship between study variables. R2 was used to assess the contribution of independent variable on dependent variable. Data was presented using frequency tables, charts and graphs. The F-test was used to evaluate the significance of the obtained results. The study findings will be of great importance to the SACCO management, academicians and future scholars, regulator and the government. The study indicated that the effect of liquidity management, net cash flows, credit lending and investment in non-core business on liquidity of SACCOs was positive and significant. The study concluded that SACCOs in Kirinyaga County mostly capitalized on liquidity management and as such it affected the SACCOs’ liquidity. In addition, the study concluded that it was critical for SACCOs to have adequate liquidity in order to ensure that they meet short term maturing obligations. The SACCO management must put in place financial strategies to ensure that liquidity is effectively managed on a regular and timely basis and that appropriate policies and procedures are established to limit and control material sources of liquidity risk.

Full Length Research (PDF Format)